The Office of Lawyer Regulation (OLR) reminds lawyers that fiduciary accounts, as well as Interest on Lawyers' Trust Accounts (IOLTA), are subject to the overdraft reporting requirements of SCR 20:1.15(h) and SCR 20:1.15(j)(9). Demand accounts established by a lawyer for estates, guardianships, trusts, and the like must, under virtually all circumstances, have an overdraft agreement in place with the financial institution and the OLR. If the lawyer or the lawyer's office can disburse funds from a trust account or a fiduciary account by check, the account must be covered by an overdraft agreement, unless one of the following three exceptions exists.
Wisconsin Lawyer
Vol. 79, No. 3, March
2006
Fiduciary and IOLTA accounts subject to
overdraft notification
The Office of Lawyer Regulation (OLR) reminds lawyers that fiduciary
accounts, as well as Interest on Lawyers' Trust Accounts (IOLTA), are
subject to the overdraft reporting requirements of SCR 20:1.15(h) and
SCR 20:1.15(j)(9). Demand accounts established by a lawyer for estates,
guardianships, trusts, and the like must, under virtually all
circumstances, have an overdraft agreement in place with the financial
institution and the OLR. If the lawyer or the lawyer's office can
disburse funds from a trust account or a fiduciary account by check, the
account must be covered by an overdraft agreement, unless one of the
following three exceptions exists:
- the lawyer is serving as a bankruptcy trustee, subject to the
oversight and accounting requirements of the bankruptcy court;
- the property held by the lawyer when acting in a fiduciary capacity
is property held for the benefit of the lawyer's "immediate family
member" as defined in SCR 20:1.15(a)(6); or
- the lawyer is serving in a fiduciary capacity for a civic,
fraternal, or nonprofit organization that is not a client and that has
other officers or directors participating in the organization's
governance, SCR 20:1.15(k).
In addition, there are two alternatives to overdraft agreements, with
respect to fiduciary accounts, not trust accounts. Those alternatives
are:
- the lawyer has the fiduciary account independently audited by a
certified public accountant on at least an annual basis; or
- the lawyer holds the funds in a demand fiduciary account, which
requires the approving signature of a cotrustee, coagent, coguardian, or
copersonal representative before funds may be disbursed from the
account, SCR 20:1.15(j)(9).
For more information, contact Mary Hoeft Smith, OLR Trust Account
Program administrator, at mary.hoeftsmith@wicourts.gov
or call (608) 261-8296 or (877) 315-6941, ext. 2.
Wisconsin Lawyer
